Western Canada Steamship Co. v. Canadian Commercial Corporation, [1960] SCR 632

Supreme Court of Canada

Western Canada Steamship Co. v. Canadian Commercial Corporation, [1960] S.C.R. 632

Date: 1960-06-13

Western Canada Steamship Company Limited (Plaintiff) Appellant;

and

Canadian Commercial Corporation and Others (Defendants) Respondent.

1960: February 8, 9; 1960: June 13.

Present: Locke, Cartwright, Martland, Judson and Ritchie JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Shipping—Claim for general average constribution by carrier against cargo owner—Weakness of tail shaft because of design—Cause of weakness not known at time of loss—Unseaworthiness—Burden of proof of due diligence—Whether discharged by carrier—The Water Carriage of Goods Act, R.S.C. 1952, c. 291.

The plaintiff carrier claimed for general average contribution against the defendants as owners of the cargo carried on the plaintiff's ship "Lake Chilco", when that ship's tail shaft broke while at sea on a return voyage as a result of what was later discovered to be a defect in the main propulsion machinery. A new tail shaft was flown in a specially converted bomber from Wales to Singapore. The claim was for the difference between the cost of flying the new tail shaft and the cost of sending one by sea. The defendants denied liability on the ground that the ship was unseaworthy, and argued that the expense was not an "extra" expense incurred in place of another so as to be allowable as general expense within Rule F of the York-Antwerp Rules, 1924. Shortly before beginning its outward voyage, the ship propeller struck a fender log, but inspections showed that no damage had been done. The owner had been alerted to the high incidence of tail shaft failures on ships of that class (although the cause of this failure was still unknown at the time of the loss in this case), and had the tail shaft carefully examined before the outward voyage even though her classification did not require this to be done at the time.

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The trial judge found that the ship was unseaworthy, but that the carrier had exercised due diligence to make her seaworthy. This judgment was reversed by a majority in the Court of Appeal. The carrier appealed to this Court.

Held: The appeal should be allowed.

When unseaworthiness has been shown to be the cause of the loss, the statutory burden imposed upon the carrier by Art. IV, Rule 1 of the schedule to the Water Carriage of Goods Act, is limited to that of proving the exercise of due diligence to make the ship seaworthy before and at the beginning of the voyage. This burden does not require the carrier to prove either the cause of the loss or the cause of the unseaworthiness and is not to be treated as going so far as to make him prove all the circumstances which explain an obscure situation.

In this case, the evidence disclosed that the carrier had met the burden of proving due diligence to make the ship seaworthy before and at the beginning of the voyage. The beginning of the voyage must be taken as the period from at the least the beginning of the loading of the cargo until the ship started on the contemplated voyage. The defect in the tail shaft was a latent one in this case, and due diligence did not require the carrier to install torsiograph equipment and make numerous tests before the cause of the weakness could be determined.

The evidence did not warrant the inference that it was usual to charter an aircraft for the purpose of bringing an 8-ton shaft from Wales to Singapore. This was an extra expense incurred in place of that which would have been involved in sending one by sea.

APPEAL from a judgment of the Court of Appeal for British Columbia[1], reversing a judgment of Whittaker J. Appeal allowed.

J. I. Bird and W. C. D. Tuck, for the plaintiff, appellant.

C. C. I. Merritt and D. B. Smith, for the defendants, respondents.

The judgment of the Court was delivered by

RITCHIE J.:—This action was brought by the appellant for General Average Contribution from the respondents as owners of cargo carried in the appellant's steamship Lake Chilco on September 20, 1947, when that ship's tail shaft broke while at sea in calm weather as a result of what was later discovered to be a defect in the design of the main propulsion machinery.

The 38 Bills of Lading covering the cargo in question were identical in form and variously related to the carriage of goods from Mombasa, Colombo and Singapore to Los Angeles and Vancouver. These contracts were all expressed

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to be subject to the Water Carriage of Goods Act, 1936 (Can.), c. 49 (now R.S.C. 1952, c. 291), and to the York-Antwerp Rules, and each contained the following clause:

10. General Average shall be adjusted according to York Antwerp Rules, 1924, and, as to matters not therein provided for, according to the laws and usages of the Dominion of Canada, and the general average shall be prepared by average adjusters selected by the carrier, the said adjusters to attend to the settlement and collection of the average subject to the customary charges.

In the event of accident, danger, damage or disaster, before or after commencement of the voyage resulting from any cause whatsoever, whether due to negligence or not, for which, or for the consequence of which, the carrier is not responsible by statute, contract, or otherwise, the goods, shippers, consignees or owners of the goods shall contribute with the carrier in general average to the payment of any sacrifices, losses, or expenses of a general average nature that may be made or incurred and shall pay salvage and special charges incurred in respect of the goods. If a salving ship is owned or operated by the carrier, salvage shall be paid for as fully as if such salving ship or ships belonged to strangers.

Such deposit as the carrier or his agents may deem sufficient to cover the estimated contribution of the goods and any salvage and special charges thereon shall, if required, be made by the goods, shippers, consignees or owners of the goods to the carrier before delivery.

The Lake Chilco was built in British Columbia in 1944 in accordance with plans and specifications approved by Lloyd's Register of Shipping. She was one of the Victory Class ships which are of substantially the same design as, though not identical with, ships of the American Liberty Class. This ship was purchased by the appellant in April 1946 at which time she was inspected and surveyed by the appellant's Superintendent Engineer and a Lloyd's Registered Surveyor, and although the tail shaft was not "drawn" at that time the propeller was backed off to permit a visual examination in the normal manner, everything was found to be in order and a Lloyd's Classification Certificate was duly issued. One of the Lloyd's requirements for this ship was that the tail shaft should be drawn and inspected every three years but the next such inspection was not due until August 1947.

In April 1947 the Lake Chilco was due to leave on the voyage during which the loss occurred, and it is apparent that at this time the appellant knew that it was a matter of general interest and comment in the shipping and marine insurance world on the west coast that a considerable number of Liberty and Victory Class ships had manifested a tendency to develop a weakness in the tail shaft from some

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cause then unexplained. In fact the appellant operated 20 such ships, most of which were of the Victory Class, and in January of that same year one of these ships, the Lake Sicamous, had suffered a fractured tail shaft while at sea. These considerations no doubt account, at least in part, for the fact that the Lake Chilco's shaft was drawn and subjected to close examination by a Lloyd's Surveyor when she was in drydock at Vancouver on April 25, 1947, although the classification requirements did not make this necessary. The procedure followed in making this examination was to draw in the shaft, uncouple it and carefully examine the shaft, key, keyway, taper and the bronze liner under a magnifying glass. The rubber sealing ring and the fit of the propeller on the taper were all carefully examined, and all having been found in fit condition, the ship was prepared for sea on April 29. Lloyd's Register of Shipping issued a certificate pursuant to this examination, and although there is some suggestion that the use of substances called magnaflux and magnaglow might have disclosed concealed cracks in the shaft which could not be detected under the magnifying glass, these substances were not available at the time, and it appears to me that the usual standard and approved method of inspection was employed having regard to the then state of knowledge of all concerned, and that there was no neglect or default on the part of the surveyor.

On May 9, 1947, while the Lake Chilco was coming alongside the dock at Victoria for the purpose of loading part of her cargo for the outward voyage, her propeller struck a Douglas Fir fender log at the berth, leaving three gashes in the log about 18 inches apart, the deepest of which was about 6 inches. On the following day the master, together with the chief engineer and a marine surveyor, examined the blades and the surveyor reported that:

In so far as could be seen blades had suffered no damage and vessel consequently in fit condition to take on part cargo of lumber here and then to proceed to Mainland ports, to complete for destination.

It was recommended that close attention be given the action of propeller and shafting while proceeding to these ports, any excessive vibration to be reported at Vancouver, B.C.

On May 11 the ship proceeded to New Westminster and thence to Vancouver from which port she sailed bound for Balboa on May 16. During this voyage the shafting was observed in accordance with the recommendations of the

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surveyor and no unusual vibration which might have indicated propeller damage was noted. The propeller was again seen 3 1/2-4 feet out of the water when the ship was virtually in ballast after unloading at Beira, Portuguese East Africa in August, and at this time no damage was seen.

The ship continued on the voyage and reached Mombasa on August 21, where loading of the first of the cargo in question commenced at 5.45 p.m. on August 25. After completing loading at Mombasa, she proceeded without incident via Zanzibar to Colombo where more of the cargo was loaded and thence to Singapore where loading was completed on September 16 and 17 and from whence she sailed bound for Los Angeles on the evening of the 18th.

On the early morning of September 20, in a smooth sea, heavy vibrations suddenly shook the entire ship, and upon investigation it was found that the tail shaft had fractured at the after end and the propeller had dropped off. The Lake Chilco was towed to Singapore where it was found that no appropriate tail shaft was available for replacement, and after making inquiries in Australia, the Orient, Canada, the United States and the United Kingdom it was found that the least costly available shaft from the viewpoint of transportation was one obtainable from Wales, and as a consequence a Halifax bomber aircraft was specially converted and chartered to carry the shaft to Singapore. The cost of transporting this shaft by air was $22,018; the steamer freight would have amounted to $246.75, and the appellant now claims the difference between these two figures, namely, $21,771.25 as a General Average item on the ground that the time saved by flying the shaft out resulted in avoiding Port of Refuge expenses estimated at $24,606, and that the cost of air freight was, therefore, an "extra expense incurred in place of another expense which would have been allowable as general average" within Rule F of the York-Antwerp Rules, 1924. The relevant provisions of the York-Antwerp Rules read as follows:

RULES D. Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the advanture; but this shall not prejudice any remedies which may be open against that party for such fault.

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RULE F. Any extra expenses incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed, but only up to the amount of the general average expenses avoided.

In the event of it being determined that the respondents are liable to contribution, the only item disputed by them is the sum of $10,182 being the amount claimed as their portion of the excess of air over sea freight hereinbefore referred to which they contend to be a "normal" rather than an "extra" expense and, therefore, not one which is properly allowable as General Average expense.

The respondents, however, contend that they are not liable for any contribution at all under the circumstances of this case, alleging that the loss was occasioned by reason of the unseaworthiness of the Lake Chilco. This is expressed in the following language in para. 3 of the defence:

(a) The said Lake Chilco had, to the knowledge of the Plaintiff, while berthing at Victoria, British Columbia, on the 9th day of May, 1947, struck with her propeller a fender log with such violence as to damage the said tail shaft and to render it liable, or, alternatively, more liable to fracture and the Plaintiff failed to inspect and repair said tail shaft or failed adequately so to do and the Plaintiff permitted the said ship to proceed on the voyage in question in this action with its said tail shaft in said damaged condition and the loss of the said propeller was due directly to said damage; or alternatively to a combination of said damage and the defect in construction hereinafter referred to;

(b) The Lake Chilco was a vessel of such construction that her tail shaft was, to the knowledge of the Plaintiff, at and before the commencement of the voyage upon which she lost her propeller, liable to fracture and the said Lake Chilco lost her propeller by fracture of her said tail shaft;

(c) With knowledge of said defect in construction, or of such damage, or alternatively, of both defect and damage, the Plaintiff permitted the said vessel to proceed upon said voyage without carrying with her a spare tail shaft, and the alleged "substituted expenses" claimed in the average statement referred to in … the Statement of Claim were occasioned by such default and such unseaworthiness.

The allegation of negligence with respect to failure to carry a spare tail shaft was not sustained by the evidence and little reliance was placed upon this defence either at the trial or on the appeal.

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These defences must, of course, be viewed in the light of art. III, Rule I and art. IV, Rule I of the Schedule to the said the Water Carriage of Goods Act which read as follows:

ARTICLE III, RULE I.

1. The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to

(a) make the ship seaworthy;

(b) properly man, equip, and supply the ship;

(c) make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.

ARTICLE IV, RULE I.

1. Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation in accordance with the provisions of paragraph 1 of Article III.

Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this section.

The learned trial judge and the members of the Court of Appeal[2] treated the allegations contained in para. 3(a) and (b) of the defence separately, and examined the evidence with a view to determining whether the ship owner exercised due diligence to make the ship seaworthy (a) having regard to the fender log incident, and (b) having regard to its knowledge of the potential tail shaft weakness.

There has been no appeal from the following finding of the learned trial judge that the ship was unseaworthy and it can be taken as agreed to by the appellant:

The evidence establishes that tail shafts in ships of the Lake Chilco's class were peculiarly susceptible to torsional stress and that this was due to some defect in design of the ship or propulsion machinery. I accept the evidence of the experts who stated that the weakness engendered in the Lake Chilco's shaft as a result of this stress was probably present before the ship left Vancouver on the voyage in question, and, of course, later on when she left Mombasa. I think therefore, that by direct evidence and by inference from all the circumstances this particular allegation of unseaworthiness has been established.

The learned trial judge went on to find that the appellant had discharged the onus of proving that it exercised due diligence to make the ship seaworthy within the meaning

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of arts. III and IV of the Schedule in respect of this defect, and he found also that the respondents had fallen far short of proving unseaworthiness with respect to the fender log incident, but that, in any event, due diligence had been exercised in that regard also. From this decision the respondents appealed to the Court of Appeal for British Columbia, the members of which considered the fender log incident and the state of the appellant's knowledge as two separate issues as to which they were sharply divided in their opinion.

O'Halloran J.A. found that the learned trial judge did not err in holding that the ship owner had exercised due diligence in respect of the fender log incident and that there was not sufficient evidence to make it more likely than not that this incident was a causative factor in the loss of the propeller. He then went on to hold that the appellant had failed to exercise due diligence to make the ship seaworthy having regard to its knowledge of the frequency of tail shaft failures in Victory Class ships.

Davey J.A., on the other hand, concluded that due diligence had been exercised by the ship owner except that it had failed to discharge the burden of proving that the fender log incident, when considered together with the weakness of the shaft, did not cause or contribute to the loss, and he held that due diligence had not been exercised in this regard.

Sheppard J.A. agreed with the learned trial judge that, notwithstanding the appellant's knowledge of the tendency to weakness in these shafts, due diligence had been exercised before the commencement of the voyage, and also found that the fender log incident must be disregarded for the reason that it had not contributed to the accident, and, in any event, that the learned trial judge had found due diligence to have been exercised in respect thereof and that this finding should not be disturbed.

In the result, the Court of Appeal gave formal judgment setting aside the judgment of the trial judge and dismissing this action, and it is from this judgment that the appellant now appeals.

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The burden of proving that the loss was caused or contributed to by the fender log incident which was assumed by the respondents by their pleadings must, of course, be considered in light of the statutory rules and provisions hereinbefore recited and of the fact that it is now admitted that the vessel was unseaworthy "owing to a defect in the design of the main propulsion machinery of the ship".

The decision of Davey J.A. is based in large measure upon the conclusion which he reached as to the nature of this burden. In this regard he expressed himself as follows:

In my opinion, appellant's counsel was right in his submission that once he proved, as he did, the ship was unseaworthy at the commencement of the voyage because of the weakened shaft, which caused the casualty, the statutory onus resting on the respondent to prove due diligence required it to show the actual cause of the unseaworthiness, i.e., the cause of the weakened shaft, and that it had exercised due diligence in respect of that cause, or failing proof of the actual cause, to enumerate all probable causes and show that it had been diligent in respect of each.

This opinion is based on that portion of the judgment delivered by Fry L.J. in the Merchant Prince[3], where that learned judge discussed the burden resting on a defendant who relies upon inevitable accident as an answer to a claim founded in negligence which reads:

They must either shew what was the cause of the accident, and shew that the result of that cause was inevitable; or they must shew all the possible causes, one or other of which produced the effect, and must further shew with regard to every one of these possible causes that the result could not have been avoided.

The Merchant Prince was a case in which a ship, moving down a crowded channel on a stormy day, ran into a ship at anchor and could thus only avoid liability by showing inevitable accident. In fact, the accident was not found to have been inevitable at all because it was apparent that the probable cause of the collision was the stretching of a chain in the steering machinery which could and should have been foreseen. That case was not concerned at all with whether or not due diligence had been taken to make the ship seaworthy, the only question at issue being the cause of the collision, and it was held that the circumstances were such as to require the moving ship to prove that all causes of the mishap were beyond its control and could not have been avoided by it.

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It seems to me that the distinction between the statutory burden of proof imposed by art. IV, Rule I and the burden which falls on a party to a collision who is required to rely upon "inevitable accident" by way of defence is that in the latter case the issue to be determined is confined to "the cause" of the collision whereas in the former "unseaworthiness" must have already been determined to be a "cause" of the loss before any burden is cast upon the carrier at all.

When, as in the present case, unseaworthiness has been shown to be the cause, the burden then arising under art. IV is limited to that of "proving the exercise of due diligence to make the ship seaworthy before and at the beginning of the voyage". Notwithstanding the views expressed by Davey J.A., this language does not, in my view, serve to shift to the carrier the onus of proving either the cause of the loss or the cause of the unseaworthiness and should not be treated as going so far "as to make him prove all the circumstances which explain an obscure situation" such as the one here disclosed (see Dominion Tankers Limited v. Shell Petroleum Company of Canada Limited[4], per Maclean J.).

The evidence presented at the trial of this action attributing the loss of the propeller to the effect of torsional vibrations on the propulsion machinery of the ship is, in my opinion, so strong as to exclude the probability of the fender log incident as a contributing cause of the loss, but it is to be remembered that at the time of the striking the appellant had no way of being sure that the shaft would not be weakened by contact with the log, and, accordingly, I think it would have been incautious to ignore the possible effect of this incident on the propeller and the shaft. In this regard, however, I am satisfied that the investigation and inspection carried out in May and the subsequent care and attention given to the matter by the ship's engineer constituted the exercise of due diligence within the meaning of art. IV of the Schedule, and I am not satisfied that if any further steps had been taken any further evidence of damage would have been discovered.

It seems to me that much of the difficulty presented by this case has been created by treating the facts as if they gave rise to two separate issues of unseaworthiness casting two separate burdens of proof upon the appellant, one

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relating to the fender log incident and the other to the state of the appellant's knowledge of the ship's tendency to shaft weakness. In fact there is only one issue which has been hereinbefore stated to be whether or not, having regard to all relevant circumstances, (which would have included the fender log incident if it had been shown to be relevant) the appellant exercised due diligence to make the ship seaworthy "before and at the beginning of the voyage".

As has been pointed out, the present action is brought pursuant to 38 separate contracts of carriage entered into at Mombasa, Colombo and Singapore and relating to cargoes loaded at those points in August and September 1947. The second paragraph of each of these Bills of Lading reads as follows:

It is agreed that the custody and carriage of the goods are subject to the following terms which shall govern the relations, whatsoever they may be, between the shipper, consignee, and the carrier, master and ship in every contingency, wheresoever and whensoever occurring, and also in the event of deviation, or of unseaworthiness of the ship at the time of loading or inception of the voyage or subsequently, and none of the terms of this Bill of Lading shall be deemed to have been waived by the carrier unless by express waiver in writing signed by a duly authorized agent of the carrier.

In my view the "beginning of the voyage" contemplated by each of those contracts must be taken "as the period from at least the beginning of the loading" of the cargoes respectively referred to therein until the vessel started on the voyage contemplated thereby (see in this connection the observations of Lord Somervell in Maxine Footwear Co. Ltd. et al. v. Canadian Government Merchant Marine Ltd.[5]).

As the first of these cargoes was loaded at Mombasa on August 25 and as there is no suggestion of any change in the ship's condition or the appellant's state of knowledge between that time and September 20 when the shaft broke, it seems to me that the only question to be determined is whether or not, having regard to the state of its knowledge at that time and to all other relevant circumstances, the appellant exercised due diligence to make the Lake Chilco seaworthy before starting to load her cargo at Mombasa.

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In determining this question, it is to be remembered that as Lord Sumner said in F. O. Bradley and Sons Lim. v. Federal Steam Navigation Co. Lim.[6]:

In the law of carriage by sea neither seaworthiness nor due diligence is absolute. Both are relative, among other things, to the state of knowledge and the standard prevailing at the material time.

It was apparently made known to the appellant by a letter dated July 11 which is not in evidence that the torsional characteristics of the propulsion system of Liberty Class ships was under investigation by the American Bureau of Shipping in the Summer of 1947, but the results of this investigation, disclosing as they did the cause of the shaft weakness, were not made known until January 1948. In the meantime, the only specific recommendation made known to the appellant by the American Bureau of Shipping was contained in a letter of May 20 to which reference will hereafter be made and was to the effect that the shafts in these ships should be drawn every two years.

In view of the fact that the cause of this loss was only finally determined in January 1948 after prolonged investigation and experiment, it is perhaps helpful to recall what was said by Scrutton L.J. when the last-noted case was before the Court of Appeal in England. In speaking of the standard of seaworthiness, he made the following observations which are reported in 24 Lloyd's Law List at pp. 454-455:

The vessel is to be reasonably fit. It certainly need not have fittings or instruments which had not at the time been invented, because by subsequent inquiry a danger has been discovered which these fittings and instruments when invented might avert. While the shipowner may be bound to add improvements in fittings where the improvement has become well known or the discovery of danger established, the position is quite different where at the time of the voyage the discovery had not been made or the danger discovered. It is not enough in my view to say, "we have now after the event discovered that there was a danger to which the cargo was exposed, the nature of which was unknown at the time; and, the danger being known, we have thought of a remedy, which was not common knowledge at the time, and which a prudent owner would not be imprudent in neglecting, having regard to the existing state of knowledge."

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In the present case O'Halloran J.A. has made the following finding:

It was the frequency of tail shaft failures at sea that made clear the inherent unseaworthiness of the ship. With that knowledge the shipowner took a calculated risk that a tail shaft failure would not happen during the voyage; in these circumstances the shipowner cannot claim immunity because he did not know the exact cause of the failure.

It is true that there is evidence to the effect that in the month of April 1947 the appellant had been alerted to the high incidence of tail shaft failures in American Liberty Class ships and to a lesser extent in those of the Canadian Victory Class, and that this situation had been brought home to the appellant by the loss of the shaft of the Lake Sicamous in January 1947, but in my view this does not make clear "the inherent unseaworthiness" of the particular ship here in question.

The evidence with respect to tail shaft failures is that in 1949 it was reported in "Transactions of the Institution of Naval Architects" that 583 shafts were renewed and 100 of these ships had been disabled at sea by reason of tail shaft failure in the three years preceding December 1, 1948. There is no evidence as to how many of these ships were afloat during the period in question and the record is also silent as to the age of the ships encountering such failures and of the shafts that failed, and there is certainly no suggestion that any such failure occurred in a ship that was only three years old whose shaft had been drawn and passed as sound by a competent surveyor four months before breaking. On the other hand, it is shown that of the 20 of such ships operated by the appellant, only one had experienced such a failure and the cause of this failure was still unknown in August 1947.

The fact that special care was taken to examine the tail shaft at the time of purchase in 1946 and that this shaft was drawn and carefully examined in April 1947, although its classification did not require this to be done, indicates that the appellant was exercising more than ordinary caution because of the concern evinced in shipping circles about these failures, but it does not indicate to me that the appellant or anyone else appreciated that there was any risk of the shaft of the Lake Chilco breaking while she was at sea.

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In assessing the knowledge attributable to the appellant in August 1947, the letter of May 21 from the American Bureau of Shipping seems to me to be most significant. I think it can be taken from the terms of that letter that it represented the considered opinion of a very influential body in the shipping world as to the best remedy that could at that time be suggested for tail shaft failures in Liberty Class vessels and I think also that the ship owner was entitled to treat this as an authoritative guide in assessing the best method of limiting or excluding the risk, if any, of tail shaft breakage in these ships. The terms of the letter were as follows:

As you are aware, the record of failures at sea on tailshafts on the above mentioned vessels is quite abnormal and is a matter of considerable concern to all interested partners.

The Bureau Rules require tailshafts, with continuous liners, to be drawn every three years and in view of the above circumstances it is strongly recommended that the period between tailshaft drawings should not exceed two years for the Liberty type vessels.

It would be greatly appreciated if you would change your schedules for tailshaft drawing due dates to conform with the above recommendation and also advise your field representatives accordingly. On those vessels whose tailshaft drawings are due within a year, the shafts should be drawn for examination on the occasion of the next drydocking of the vessel.

The further letter of July 11, 1947, from the same source which has been hereinbefore referred to made no further recommendations and no further warnings were issued concerning these shafts before the time of loading at Mombasa.

The Lake Chilco was a comparatively new ship built in accordance with widely accepted standards; it is not suggested that she had had any previous trouble either with her shaft or otherwise and she had been subjected to a survey of her shaft and other machinery in April. I am accordingly of opinion that at the time when loading commenced at Mombasa on August 25 the owner was justified in regarding this as a seaworthy ship, subject only to a potential weakness of unknown origin in her propulsion system which made it necessary to have the tail shaft drawn and inspected every two years rather than every three years. In these circumstances and as the tail shaft had been drawn only four months earlier, I do not think that it was unreasonable for a carrier to load cargo nor do I think that in so doing the

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appellant was exposing the respondents to any risk of which it was or ought to have been aware other than the normal risks attendant upon any marine adventure.

The contention that something more should have been done before leaving Vancouver to discover the potential weakness seems to me to be met, at least in part, by a consideration of the length of time taken by experts working with special equipment before the cause of the weakness was determined. In saying this, I am not ignoring the fact that the investigation by the American Bureau of Shipping was delayed through a strike, but even when allowance is made for this delay it seems apparent that the defect was not one which could be discovered by any of the usual and accepted methods of inspection currently employed on the west coast of Canada in April 1947.

In any event, the appellant more than complied with the requirements of Lloyd's Register of Shipping in maintaining the Lake Chilco and it is to be remembered that one paragraph of the written "Admission of Facts" agreed to on behalf of the respondents reads as follows:

Lloyds Register of Shipping was established for the purpose of obtaining for the use of Merchant Shipowners and Underwriters a faithful and accurate classification of mercantile shipping, and many shipowners as a matter of sound commercial practice maintain their vessels in accordance with the requirements of this Classification Society. (The italics are mine.)

While not express, it does seem to me that this constitutes a tacit recognition of the fact that the requirements of "sound commercial practice" are considered by many ship owners to be met by maintaining the Lloyd's classification requirements.

The decision of O'Halloran J.A. is based in large measure upon the case of Smith Hogg & Co. Ltd. v. Black Sea and Baltic General Insurance Co.[7], also reported in 60 Lloyd's Law List, p. 253, and his reasoning in this regard is disclosed in the following excerpt from his judgment:

That case has basic similarities with the present case in that (a) the happening which actually brought about the loss crystallized a substantial time after the ship had commenced her voyage; and (b) the cause of the disaster was the ship's instability which made the ship unseaworthy when she sailed from Soroka. In the Smith Hogg case the unseaworthiness was due to its large negative metacentric height, and in our case was due to

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torsional vibration, both due to the design of the ship; (c) the ship owners in the Smith Hogg case were held not to have exercised due diligence; with due deference the same reasoning applies here, for the lack of due diligence here was sending an unseaworthy ship to sea; (d) in each case the true cause of the loss was not the lack of due diligence in the conventional sense but inherent unseaworthiness springing from the fault of the ship owners in knowingly sending an unseaworthy ship to sea; in the Smith Hogg case owing to its instability and in this case owing to its being subject to tail shaft failure at sea; and (e) in either case the disaster would not have occurred but for the unseaworthiness when the ship was sent to sea.

I do not find it necessary to analyze the facts of the Smith Hogg case because I accept the view of that case expressed by Lord Wright in the course of his judgment which appears to me to be at variance with the interpretation placed upon it by Mr. Justice O'Halloran. Lord Wright said of the ship involved in that case[8]:

The unseaworthiness, constituted as it was by loading an excessive deck cargo, was obviously only consistent with want of due diligence on the part of the shipowner to make her seaworthy. Hence the qualified exception of unseaworthiness does not protect the shipowner. In effect, such an exception can only excuse against latent defects. The overloading was the result of overt acts.

As I understood it, Mr. Bird, on behalf of the appellant, rejected the suggestion that the potential weakness of the Lake Chilco's shaft was "a latent defect", and while it is no doubt true that, at least for certain marine insurance purposes, an error in design is not considered to be a latent defect, it nevertheless seems to me that the condition of the shaft of the Lake Chilco, when it was inspected in April, was such that its potential weakness was not discoverable by the exercise of due diligence, and that the defect was "latent" in the sense in which Lord Wright used that word in the passage above quoted.

The observations of Kennedy J. in Jackson v. Mumford[9], have been widely quoted as indicating one of the limitations of the words "latent defect in the machinery" for purposes of the marine insurance clause there under consideration. He there says:

But for the purposes of today it is sufficient for me, without attempting to define its boundaries, to say that the phrase, at all events, does not, in my view, cover the erroneous judgment of the designer as to the effect of the strain which his machinery will have to resist, the machinery itself being faultless, the workmanship faultless, and the construction precisely that which the designer intended it to be.

[Page 648]

Although the defect in the design of the main propulsion machinery of the Lake Chilco would, no doubt, not be a latent defect within the meaning of Jackson v. Mumford, supra, it nonetheless seems to me that it had much in common with the kind of defect to which Branson J. referred in Corporacion Argentina de Productores de Carnes v. Royal Mail Lines, Ltd.[10], when he said:

Supposing that one had a tail-shaft which had a flaw in it which nobody could possibly discover by any examination short of destroying the thing, and that tail-shaft broke, it would be no answer to the shipowner's defence that there was a latent defect not discoverable by due diligence, to say that it might be he had not exercised any diligence to look at that tail-shaft at all. If the defect is such that it cannot be discoverable by due diligence it becomes immaterial to consider whether due diligence was exercised or not, because ex hypothesi if it had been exercised it would have been useless.

Although the defect in the present case was in the design rather than in the shaft itself and it would not have been necessary to destroy the thing in order to discover the weakness, it is nonetheless apparent from the American Bureau of Shipping letter of January 8 that it was necessary to install "torsiograph" equipment on a ship and to conduct numerous experiments before the cause of the weakness could be determined and in my view the exercise of due diligence to make the ship seaworthy under the circumstances did not require the ship owner to install such equipment even if it had been available or to make such tests.

Although I agree with Mr. Justice Branson when he says that "if the defect is such that it cannot be discoverable by due diligence, it becomes immaterial to discover whether due diligence was exercised ….". I do not base my decision on this premise because I consider that the evidence discloses that due diligence was in fact exercised by the appellant in this case in the manner and for the purposes required by arts. III and IV of the Schedule of the Water Carriage of Goods Act, and I am, therefore, of opinion that the respondents are liable for contribution in General Average in respect of the expenses consequent upon the loss of the ship's propeller in the manner and to the amount determined by the Average Adjustment statement which is an exhibit in this case.

[Page 649]

As has been indicated, the respondents contend that they are not liable for the difference in cost between the amount of freight which would have had to be paid if the shaft had been shipped from England by sea and the amount which actually was paid in bringing it out by air. This contention is based on the ground that spare parts for ships are frequently flown into Singapore by air and that the cost of flying the shaft was a usual expense and not one of the "extra" expenses contemplated by Rule F of the York-Antwerp Rules. In my view the evidence does not warrant the inference that it is usual to charter an aircraft for the purpose of bringing an 8-ton shaft from Wales to Singapore, and I cannot treat this as anything other than an extra expense which was incurred in place of the expense which would have been involved if the ship had been required to remain at Singapore while a shaft was being sent out by sea.

In view of all the above, I would allow this appeal with costs and restore the judgment of the learned trial judge.

Appeal allowed with costs.

Solicitors for the plaintiff, appellant: Campney, Owen & Murphy, Vancouver.

Solicitors for the defendants, respondents: Bull, Housser, Tupper, Ray, Guy & Merritt, Vancouver.